Indian mulls Iranian oil import cut over gas field row
India is reportedly planning to cut its crude oil imports from Iran by a quarter of what was bought last year. India had earlier threatened to order state refiners, namely Hindustan Petroleum, Bharat Petroleum, Mangalore Refinery and Petrochemicals Ltd, and Indian Oil Corp to cut oil procurement from Iran. The developments follow a row between New Delhi and Tehran over an Iranian gas field.
India is the second largest importer of Iranian crude oil. Last year, India imported around 510,000 barrels per day (bpd) of crude from Iran, according to Thomson Reuters Eikon shipping data. Following India's planned oil cut, this could reduce to 370,000 bpd this year.
In 2008, an ONGC-led consortium of Indian companies had discovered the Farzad B natural gas field in Iran, which holds an estimated 12.5 trillion cubic feet of reserves. Due to international sanctions on Iran, the India consortium was unable to develop the oil field. Iran has refused to grant developmental rights to India despite sanctions being lifted following the 2015 Iran nuclear deal.
India which had tried using its leverage as one of Iran's largest crude oil customer persuaded Tehran to award it development rights. When Iran refused, angry India threatened to cut its oil imports. Iran claims ONGC Videsh's $3 billion proposal to develop the Farzad B field is not beneficial for it and is instead looking for other international parties.
India's overall crude oil demand stands at 4.6 million bpd. Analysts believe India could import more oil from Europe as the price of the European European oil benchmark Brent and Middle East price-setter Dubai crude is narrowing. Russian oil major Rosneft, which has bought Essar's Vadinar refinery in Gujarat, may also start importing crude oil from Venezuela.